Costco and Phonak: Much Ado About Nothing?

H. Terrance (Terry) Ross Vice President, MedRx, Inc.
H. Terrance (Terry) Ross
Vice President, MedRx, Inc.

Inquiring minds want to know about the imminent Phonak-Costco partnership. HHTM readership soared last week after David Kirkwood  reported corporate confirmation of the deal and Hearing Economics began sorting the deal’s rumors from reality.

Elsewhere, web-based professional and social media rapidly filled with Audiologists’ tears of betrayal, stories of heartbreak, fear and growing outrage. Readers will want to look at Kevin Liebe’s compilation and comparison of reactions in this week’s Hearing Views section.

In times of violent social and economic upheaval, it’s good to turn to cooler heads for guidance. Guest author Terry Ross starts the healing process today.  Terry is a long-time survivor on the Audiology scene with a good grasp of economics, a keen sense of reality and, ultimately, a story of hope for Audiologists.  His full bio is below.


In a World Where Audiologists’ Hearts Are Breaking, One Man Puts His Finger on the Pulse


Once again, I read with amusement, the fear and loathing that is exhibited by our industry when a publicly held company announces a strategic decision to grow its business either through acquisition of corporate-owned retail clinics, initiating new distribution channels, or establishing strategic partnerships with other business entities.

The reality is that every one of the top five companies has such supply relationships and they will continue to explore these opportunities in the future.  In an industry that remains underserved, corporations must secure new channels of distribution or tap new age groups to grow their core business.  They surely have fiduciary duties to their shareholders to maximize their investments, and owe it to their employees and customers to re-invest in research, so that we gain access to new and more powerful solutions.  Why does it seem we are always surprised when such events happen like the recent Costco/Phonak agreement?

Our industry, even today as the average age of the population continues to increase, still grows at an embarrassingly slow annual rate.  Companies need fuel to research develop new products – that means they have to grow organically.


Companies  simply cannot thrive  by constantly trading customers back and forth, as has been the unfortunate model that our industry has had to live with for much of its existence.


Competition: It’s a Good Thing


History has shown that new competition often helps expand local businesses that have similar products and services.  Why, you may ask?

First, public awareness is heightened – more people are exposed to the great technologies our industry has to offer.

Secondly, in the case of Costco, a younger, more tech-savvy customer is entering the market. This is great news for all private practice businesses, as it offers new opportunities to reach consumers in the future at a younger age.  Often as people age, they select a more intimate and personal environment to seek healthcare solutions.

Third, in general, private practitioners tend to focus more on the total patient journey, on-going consultation and rehabilitation, which leads to a more personal relationship than typically happens in a big-box store environment.  Simply put:  Different professional environments produce different consumer expectations.

At the end of the day, there will always price-driven consumers – they exist with or without Costco in virtually every market.   The fact is, Costco has been in the hearing care business for some two decades – so that competition has been evident for many years.


Reports of the Death of Audiology are Greatly Exaggerated


Why all the fuss now?   Costco won’t affect you, other than in a positive way, so long as you:

  •  have a solid business plan and customer base
  • remain focused on what has brought you success in the past
  • keep to the business practices that have worked for you

Private practice isn’t dead, dear colleagues, it is simply facing new challenges. Those who are prepared to embrace the reality of more competition and have confidence in their abilities will continue to thrive.


About Terry Ross


Terry Ross is Vice President of MedRx, Inc., a global manufacturer of PC-based audiometric diagnostic and testing instrumentation and subsidiary of William Demant Holding Group. He has over 35 years of  executive management experience within the hearing care industry.    He is responsible for directing the global sales and marketing activities for MedRx Inc., and is responsible for the global distribution of the full line of MedRx brand audiometric technologies.

 Mr. Ross has spent the last three decades in a variety of executive management positions in sales, training and marketing of hearing care-related products, equipment and services.   He received his B.S. degree from Mankato State University, Minnesota, USA and is a certified sales trainer from Wilson Learning® Center – an international professional sales training and executive development organization.

feature photo from hallowpalooza invasion of the body snatchers

About Holly Hosford-Dunn

Holly Hosford-Dunn, PhD, graduated with a BA and MA in Communication Disorders from New Mexico State, completed a PhD in Hearing Sciences at Stanford, and did post-docs at Max Planck Institute (Germany) and Eaton-Peabody Auditory Physiology Lab (Boston). Post-education, she directed the Stanford University Audiology Clinic; developed multi-office private practices in Arizona; authored/edited numerous text books, chapters, journals, and articles; and taught Marketing, Practice Management, Hearing Science, Auditory Electrophysiology, and Amplification in a variety of academic settings.


  1. Aww Terry. You take away all the fun. I was getting a kick out of listening to all the wining on the listserves about the whole Costco thing. I heard the same thing when they started selling hearing aids at Sam’s. It turned out to be one of my best referral sources. If we stopped doing business with every company that sold to a competitor, we would very soon run out of manufacturers to participate with. Audiologists need to go back to their training and stop acting and thinking like hearing aid dealers. This can only make us stronger and more successful.

  2. I agree with all that you put forth here Terry. A business plan and best practices in place and we have nothing to fear from Costco or anyone else. Thanks

  3. Nicely done Terry. Hopefully, others will read this and come to some obvious conclusions, a couple of which may involve such observations as: the present delivery model has some limitations, perhaps all delivery models can “just get along”, and my personal favorite: you have hardly seen anything yet.

  4. Hi Terry. Nice to hear your point of view. BUT, for full disclosure, isn’t MedRx one of the top suppliers of equipment to Costco as well? Please correct me if I’m wrong. But if I’m right, your point of view has a conflict of interest.

    1. No selling to Costco is not a conflict of interest for MedRx. That would be like saying if a Costco employee came to you for hearing aids would you deny him or her aids? I doubt it.

    2. Hi Scot:
      We are not a primary supplier to Costco..they have never purchased our equipment – full disclosure ….

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